Which statement best describes how a credit card works?
A credit card provides cash advances that you do not need to pay back.
A credit card links directly to your bank account, allowing for instant withdrawals.
A credit card allows you to borrow money up to a certain limit to make purchases, which you must pay back with interest if not paid in full by the due date.
A credit card requires you to pay a fee for every transaction made.
If you buy a $1,000 bicycle, which credit card payoff strategy will result in your paying the LEAST total amount?
Transferring the balance to a card with a higher interest rate.
Paying off the full balance in one payment by the due date.
Paying the minimum payment each month until the balance is cleared.
Making a partial payment each month for a year.
If your credit card limit is $950 and your outstanding balance is $725, what is the largest amount you can charge on that card in the upcoming month?
$100
$950
$225
$75
Each of the following people has $5,000 in debt. Which debt is most worthwhile?
A medical debt for necessary health treatments.
Credit card debt incurred from buying luxury items.
A student loan used to finance a degree with high earning potential.
A personal loan used to pay for a vacation.
As you move through your payment schedule on an amortized loan, what will happen to the interest portion of each month’s payment?
The interest portion will decrease each month.
The interest portion will increase each month.
The interest portion will fluctuate randomly each month.
The interest portion will remain the same each month.
You’re debating whether to buy a trendy fall jacket that costs a whopping $200! You have it sitting in your online cart, and you see there’s a “Buy Now, Pay Later” option available for the jacket. Which best describes an example of how that would work?
You borrow money from a bank to pay for the jacket and pay it back with interest.
You make a small down payment now and pay the remaining balance in installments over a set period.
You pay the full $200 upfront and receive the jacket immediately.
You can take the jacket home now but have to return it if you don’t pay the full amount within 30 days.
You’re debating whether to buy a trendy fall jacket that costs a whopping $200! You have it sitting in your online cart, and you see there’s a “Buy Now, Pay Later” option available for the jacket. Which best describes an example of how that would work?
You can take the jacket home now but have to return it if you don’t pay the full amount within 30 days.
You borrow money from a bank to pay for the jacket and pay it back with interest.
You make a small down payment now and pay the remaining balance in installments over a set period.
You pay the full $200 upfront and receive the jacket immediately.
Sofia has $3,700 saved to use for a down payment, and she’s about to buy a car that costs $29,000. How much would you expect her loan principal to be?
$25,300
$23,300
$21,000
$29,000
If you were offered two auto loan options with the same principal and interest rate, but one was a 48-month loan and one was a 72-month loan, which outcome below will reflect the impact of that difference in term?
The 48-month loan will have a lower total cost due to a higher interest rate.
The 72-month loan will pay off the principal faster than the 48-month loan.
The 48-month loan will have a higher monthly payment but will cost less in interest over the life of the loan.
The 72-month loan will have a lower monthly payment but will cost more in interest over the life of the loan.
Malikia’s mom recommends that he spend a year building his credit history and boosting his credit score before he applies for a loan to buy his dream car, which costs $54,000. Why is that good advice?
It allows him to save more money for the car while waiting.
A higher credit score can result in lower interest rates, making the loan more affordable.
It guarantees that he will be approved for the loan regardless of his income.
Building credit history is unnecessary for car loans.